Siem Offshore Inc’s (OB:SIOFF): Siem Offshore Inc. owns and operates offshore support vessels (OSVs) for the offshore energy service industry. The company’s loss has recently broadened since it announced a -øre164.32m loss in the full financial year, compared to the latest trailing-twelve-month loss of -øre173.78m, moving it further away from breakeven. Many investors are wondering the rate at which SIOFF will turn a profit, with the big question being “when will the company breakeven?” I’ve put together a brief outline of industry analyst expectations for SIOFF, its year of breakeven and its implied growth rate.
See our latest analysis for Siem Offshore
According to the industry analysts covering SIOFF, breakeven is near.
They expect the company to post a final loss in 2019, before turning a profit of øre42.60m in 2020.
So, SIOFF is predicted to breakeven approximately
a couple of months from now!
In order to meet this breakeven date, I calculated the rate at which SIOFF must grow year-on-year. It turns out an average annual growth rate of 99.73% is expected,
which
signals high confidence from analysts.
If this rate turns out to be too aggressive, SIOFF may become profitable much later than analysts predict.
Given this is a high-level overview, I won’t go into details of SIOFF’s upcoming projects, though, bear in mind that by and large an oil and gas business has lumpy cash flows which are contingent on the natural resource and stage at which the company is operating. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.
Before I wrap up, there’s one issue worth mentioning. SIOFF currently has a debt-to-equity ratio of over 2x. Typically, debt shouldn’t exceed 40% of your equity, which in SIOFF’s case, it has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.
Next Steps:
There are too many aspects of SIOFF to cover in one brief article, but the key fundamentals for the company can all be found in one place – SIOFF’s company page on Simply Wall St. I’ve also put together a list of important aspects you should further examine:
- Valuation: What is SIOFF worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether SIOFF is currently mispriced by the market.
- Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Siem Offshore’s board and the CEO’s back ground.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.